A subgenomic fragment of hepatitis B virus (HBV) has been inserted into the vector pSV2gpt. This fragment carries an intact core antigen gene. Using a protoplast fusion method of transfection developed in this laboratory, this plasmid has been stably introduced into a human mucoepidermoid carcinoma cell line which exhibits many of the properties associated with normal epithelial cells. Cells expressing the HBV core antigen at a low basal level exhibit a marked cytopathic response. Treatment of these cells with 5 feet-azacytidine, as well as changes in culture conditions, raises the level of expression to a lethal level. There appears to be a correlation between elevated expression of the core antigen gene and loss of cytosine methylation in DNA at a specific site in the promoter region. Factors that regulate core antigen gene expression in transfected cultures also cause similar effects in an hepatocellular carcinoma cell line which has carried several copies of the HBV genome since its isolation.